Feds busting up scam targeting elderly homeowners in Chicago

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CHICAGO -- An investigation into a home repair scam that has hurt many elderly Chicago homeowners has the feds closing in on one of the players and a contractor out of business.

WGN Investigates first spoke to 88-year old Lillie Williams in January of 2015 at the beginning her fight to save the North Lawndale two-flat she’s called home for more than 40 years. At the time, the lender was threatening to foreclose on it over a reverse mortgage she was tricked into taking out by Mark Diamond. Illinois Attorney General Lisa Madigan calls him a con-man who’s been taking advantage of elderly, African-American homeowners on the West and South sides for more than 30 years.

“He doesn’t do the repairs, he doesn’t do anything he says he’s going to do,” Madigan said. “He steals people’s money and he ruins their lives.”

Diamond’s schemes have varied over the years, according to Madigan but his latest promised to fix up people’s homes through a free government program. In reality, he was signing them up for a reverse mortgage and running off with the cash without completing the work. His victims say he used a black woman named Cynthia as his birddog.

“This girl was going around in the neighborhood asking people about and it,” Williams said. “She talked to my daughter about it and my daughter told her about me.”

In a new twist, WGN Investigates has learned Cynthia is 46-years-old Cynthia Wallace of Chicago. She’s now spending her days in a jail cell. She was arrested for a different scam using the aliases “Sherry Rice” and “Shree Box.” In January, she was charged by feds with posing as a federal housing official to trick homeowners into giving her money.

Prosecutors say Wallace made several calls to two Chicago-area homeowners pretending to work for HUD and threatening to foreclose on their homes unless they wired her money. She was arrested in a sting set up by federal agents. She has since plead not guilty, but court records show she’s in plea negotiations.

Wallace has a lengthy arrest record on theft by deception charges.

WGN Investigates showed her booking photo to several of mark diamond’s victims and they confirm she’s Cynthia -- the woman who paved the way for Diamond to get into the homes of African-American seniors and sell them on a fake home improvement program.

And the feds confirm they are continuing their criminal investigation into Diamond’s business interests. FBI agents raided his construction company’s office last year.

In the meantime, Diamond is now out of business. The attorney general’s office sued under the Consumer Fraud and Deceptive Business Practices Act and after years of legal wrangling, a judge has permanently barred Diamond from arranging loans as well as performing any home remolding or repair work in the state.

Last week, that same judge ordered Diamond to pay more than $2.3 million dollars to 47 homeowners who were scammed by him, Williams included, to the tune of $107,000.

Community activist Rev. Robin Hood is Williams’ nephew. He was the first to discover the scam that put her home in jeopardy. Since then, he’s worked with Illinois lawmakers to get the law changed regarding reverse mortgages. Now homeowners are required to receive counseling from government-approved agencies about the risks and there must be a three days cooling-off period before the loan closes. The law also prevents those who facilitate the mortgage from receiving the money directly.

Hood has also gotten attorney Dennis Smith with John Marshall Law School’s pro bono law clinic to help fight his aunt’s foreclosure case. Smith is now suing the lender and attempting to have the mortgage contract nullified because he says Williams never received the required counseling.

Unfortunately, Williams did not live long enough to celebrate these small victories. She passed away June 19th.

Her death has now thrown the case into a legal limbo and left her nephew and her daughter to fight for the legacy she had hope to leave her children and grandchildren.

Diamond has not been charged criminally with anywrong doing. WGN Investigates has attempted to interview him since we first started reporting on this story a year and a half ago. But he hasn’t returned calls and wouldn’t comment when he was approached in court. His new attorney also declined to talk. His previous attorney withdrew from the case. Diamond says he plans to appeal the $2.3 million judgment.